Former management should pay up for misdeeds: Mahindra Satyam
Mahindra Satyam believes that it is high time for the former auditors, management and owners to pay up for their past misdeeds at the company.
Davos: Following the effective turnaround of the fraud-hit Satyam Computer into a successful business venture, Mahindra Satyam believes that it is high time for the the former auditors, management and owners to pay up for their past misdeeds at the company.
The erstwhile Satyam Computer had to suffer huge losses due to the misdeeds of its former auditors, as also the previous owners and management, Mahindra Satyam Chairman Vineet Nayyar told media on the sidelines of the World Economic Forum Annual Meeting here.
Mahindra Satyam was one of the strategic partners of the 5-day WEF meeting that began on January 25.
Asked about the damages sought from the former auditor PwC and the previous promoter and top management, Nayyar said, "We wanted to tell them it's high time that you pay for the misdeeds and the subsequent huge losses suffered by us.
"We have suffered hugely and we want it back from them. There were lapses in the fiduciary responsibilities and those were huge gaps," he added.
Once a leading Indian IT company, Satyam Computer was hit by a multi-million dollar corporate fraud, admitted by its own founder and then chief B Ramalinga Raju over three years ago.
After the government intervention into the case, the company was sold through an auction process to the auto-to- technology conglomerate Mahindra group, which renamed it as Mahindra Satyam.
Besides the previous promoters and management personnel, the company's then auditors were also chargesheeted for the fraud.
Talking further about the fraud, Nayyar said that the former management had hired huge excess staff to cook up the company's books and to show highly inflated revenue growth.
Nayyar said there were no ghost staff and people were indeed hired, although in excess.
Talking about the journey since acquiring Satyam Computer, he said there have been really no major surprises and it has been a smooth transition process.
"In the first year, we wanted to ensure that the company survives. We altered the fundamentals so that it can grow. We got rid of the excess staff, then we got rid of life-threatening concerns, which were many.
"There were also cash flow issues. We also made sure that the customers do not de-camp. In the second year, we mostly focussed on getting the fundamentals right and in the third year we started making efforts to grow the company," he noted.
Nayyar said the company has succeeded in each year so far and it has effectively addressed all the problems that were there in the company at the time of acquisition.
On the company's moving into the top league, he said that the combined technology business of the Mahindra group (Tech Mahindra and Mahindra Satyam together) is already there and moving into the top three IT players of the country would indeed be a target.
The group plans to merge the two entities by the end of this year.
"We already have a combined employee strength of over 70,000 people and have a large presence," Nayyar said. On the level of future hiring, Nayyar said, "If we get a 20-25 percent revenue growth, the manpower would also increase in the same proportion."
Commenting on the euro crisis and its impact on Indian IT companies, he said that it was serious issue in Europe and it does have a serious implication for the technology spending of the companies.
"But at the same time, the European companies would look at alternative destinations and that puts India at an advantageous position," he said.
Asked about German Chancellor Angela Merkel's comments here that foreign companies coming to Europe would have to create jobs there, Nayyar said, "Indian companies would have to take into account the concerns of Europeans and other foreign countries about the jobs.
"If we set up businesses abroad, we will have to create jobs there and we will certainly do so," he added.
Asked about his wish-list for the upcoming Union Budget, Nayyar said he would want to see some more clarity on the regulations concerning the IT sector, as there were lots of ambiguity in the existing rules and they create unnecessary confusion.